Private airport vs public airport?

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Dennis
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Private airport vs public airport?

Post by Dennis » 07 Dec 2009, 01:11

Here's the thing: There are proposals to privatize SJU. Currently, the government here is somewhat unpopular with the people and it looks like we are repeating what happened at the close of the last decade where many government institutions were sold to private corporations (who by the way, charge us an arm and a leg for services). Anyways, I'd like to know if someone knows whether private airports can benefit the city/country or would harm them. Would it mean higher landing fees? Higher taxes for airlines? In all, would it hurt passengers and tourism?
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Re: Private airport vs public airport?

Post by NWADC9 » 07 Dec 2009, 02:05

Dennis wrote:it looks like we are repeating what happened at the close of the last decade where many government institutions were sold to private corporations (who by the way, charge us an arm and a leg for services)
The government does the same thing, only they're called "taxes"
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Re: Private airport vs public airport?

Post by Dennis » 07 Dec 2009, 02:21

I'd rather pay taxes (money that will eventually be used to benefit me) than paying fees (a charge just to serve me). Take a look at the airlines. Baggage fee? US's fee for charging a fee?
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Re: Private airport vs public airport?

Post by Aaron Robinson » 07 Dec 2009, 02:52

The primary reason for airport privatization is to unlock the accumulated value created by the airport and to allow market forces, rather than inefficient governments, to work unhindered in airport management. The general consensus is that airport privatization is positive.
-Governments: the sale from airports can be huge and easy public debt (Chicago Midway alone was agreed to be sold for $2.5 billion).
-Airlines: more efficient private management finds ways to generate and grow non-aeronautical revenue (concessions, parking, etc.), generally resulting in lower landing fees.
-Employees: a possible loser. Previously protected government jobs may no longer be so safe. But, benefits in all the other areas tend to make this on balance still positive.
-Other businesses: as mentioned before, there is growth in non-aeronautical revenue and also construction thanks to better expansion financing and airports that are more popular with airlines and passengers.
-Passengers: as a result of more efficient management, privatized airports, thanks to their lower costs and better facilities, tend to attract more airlines, more routes, and more competitive fares.

So why isn't it done more in the U.S.? The U.S., while the largest bastion of free market economics in the world, has an 'except' policy when it comes to aviation in the interests of national security and job protection. Go ask the national government and Jim Oberstar in particular why we're still behind the rest of the world in this industry.

The BAA case is obviously one where airlines and the government question the benefits of privatization thanks to the supposed (I agree) monopoly that BAA has.
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Re: Private airport vs public airport?

Post by RatherBFlyin » 07 Dec 2009, 03:34

I believe Branson Airport (KBBG) is a privately owned commercial airport in the US.

As Aaron mentioned, privatizing an airport has the opportunity for great good, or great harm, depending on the company it is sold to. Perhaps we should all pool our money and buy it. 8)

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Re: Private airport vs public airport?

Post by Dennis » 07 Dec 2009, 04:14

I thought about Aaron's points. I guess this is more of an issue against the government itself and not the business part and that regardless of the pros and cons, I'll be against it.
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Re: Private airport vs public airport?

Post by Aaron Robinson » 07 Dec 2009, 04:15

To add further, I believe that an additional reason for avoiding airport privatization in the U.S. is its antitrust policy, which prevents monopoly situations from occurring. I once worked for the Metropolitan Washington Airports Authority, which, although privately run, is overseen by a government-appointed board of directors to ensure public oversight. So there are exceptions in the U.S., although Midway would have been the first major privatization.
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Re: Private airport vs public airport?

Post by a.trailblazer7 » 08 Dec 2009, 18:38

To add further, I believe that an additional reason for avoiding airport privatization in the U.S. is its antitrust policy, which prevents monopoly situations from occurring

This part of Aarron's comment is correct.
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Re: Private airport vs public airport?

Post by RatherBFlyin » 08 Dec 2009, 19:15

Uncontrolled monopolies are not allowed, but there are instances where a monopoly is permitted when there is only one supplier of a necessary good or service in an area. In these cases, the government typically keeps a close eye on the situation to make sure the company does not take advantage of the monopoly to artificially inflate prices.

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Re: Private airport vs public airport?

Post by Northwestdc9 » 09 Dec 2009, 04:47

A monopoly isn't illegal, it's how you get it than can get you in trouble.
Simply being the only game in town, isn't a problem, but undercutting/dirty tricks/etc to gain a monopoly definitely are.
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